EXHIBIT 4.1
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AMERICHOICE CORPORATION
and
[NAME OF RIGHTS AGENT]
as
Rights Agent
RIGHTS AGREEMENT
Dated as of ______________, 2002
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TABLE OF CONTENTS
Section Page
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Section 1. Certain Definitions...........................................................1
Section 2. Appointment of Rights Agent...................................................5
Section 3. Issuance of Right Certificates................................................5
Section 4. Form of Right Certificates....................................................7
Section 5. Countersignature and Registration.............................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates..............................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................9
Section 8. Cancellation and Destruction of Right Certificates...........................11
Section 9. Reservation and Availability of Capital Stock................................11
Section 10. Preferred Stock Record Date..................................................12
Section 11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price.13
Section 12. Certification of Adjustments.................................................20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.........20
Section 14. Fractional Rights and Fractional Shares......................................24
Section 15. Rights of Action.............................................................25
Section 16. Agreement of Right Holders...................................................25
Section 17. Right Certificate Holder Not Deemed a Stockholder............................26
Section 18. Concerning the Rights Agent..................................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................26
Section 20. Duties of Rights Agent.......................................................27
Section 21. Change of Rights Agent.......................................................28
Section 22. Issuance of New Right Certificates...........................................29
Section 23. Redemption...................................................................30
Section 24. Exchange.....................................................................30
Section 25. Notice of Proposed Actions...................................................31
Section 26. Notices......................................................................32
Section 27. Supplements and Amendments...................................................33
Section 28. Determinations and Actions by the Board......................................33
Section 29. Successors...................................................................34
Section 30. Benefits of this Rights Agreement............................................34
Section 31. Delaware Contract............................................................34
Section 32. Counterparts.................................................................34
Section 33. Descriptive Headings.........................................................34
Section 34. Severability.................................................................34
Exhibit A -- Form of Certificate of Designation
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of Rights
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT (this "RIGHTS AGREEMENT"), dated as of
__________, 2002, between AMERICHOICE CORPORATION, a Delaware corporation (the
"COMPANY"), and [NAME OF RIGHTS AGENT], a _______________ banking corporation
(the "RIGHTS AGENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has (i) authorized the
issuance and declared a dividend of one right (a "RIGHT") for each share of
the common stock, par value $.01 per share ("COMMON STOCK"), of the Company
outstanding as of the Close of Business (as defined herein) on _______, 2002
(the "RECORD DATE"), each Right initially representing the right to purchase
one one-thousandth of a share of Preferred Stock (as defined herein) of the
Company upon the terms and subject to the conditions hereafter set forth, and
(ii) further authorized the issuance of one Right with respect to each share
of Common Stock of the Company that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Expiration Date and
the Final Expiration Date (each such term as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms shall have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person that, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15%
or more of the outstanding Common Stock; provided, however, that (i) the term
"ACQUIRING PERSON" shall not include an Exempt Person (so long as such Person
remains an Exempt Person) or a Permitted Holder; (ii) a Person shall not be
deemed to have become an Acquiring Person for any purpose of this Agreement if
the Board of Directors in its good faith judgment determines that a Person has
inadvertently become the Beneficial Owner of 15% or more of the outstanding
Common Stock (or in the case of a Permitted Holder, has inadvertently acquired
additional shares of Common Stock so that it is no longer a Permitted Holder)
and within ten days after the date upon which the Company shall first become
aware of the occurrence of such an event, the Board of Directors in its sole
discretion provides such Person with a five-day period to divest a sufficient
number of shares so that such Person no longer is the Beneficial Owner of 15%
or more of the outstanding Common Stock (or in the case of a Permitted Holder,
to divest all shares of Common Stock that prevent such Person from being a
Permitted Holder), and such Person has so divested such shares of Common Stock
at the end of any such five-day period and has not acquired any additional
shares of Common Stock prior to the end of such five-day period; and (iii)
shares of Common Stock Beneficially Owned by the Company or any Subsidiary of
the Company shall not be considered outstanding for purposes of calculating
any Person's percentage ownership of the outstanding Common Stock.
(b) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as
in effect on the date of this Rights Agreement.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall
be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY
OWN", securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates or
Associates pursuant to, and in accordance with, the applicable rules
and regulations promulgated under the Exchange Act, until such
tendered securities are accepted for purchase or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall
not be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN", any
securities if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable by
such Person on Schedule 13D or Schedule 13G under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliates or Associates thereof) with
which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as
described in the proviso to clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the Company;
provided, however, that nothing in this paragraph (d) shall cause a Person
engaged in business as an underwriter of securities to be the Beneficial Owner
of, or to Beneficially Own, any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, (i) the phrase "THEN OUTSTANDING", when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding that such Person
would be deemed to Beneficially Own under this Agreement.
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(e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Eastern Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern Time, on the next succeeding
Business Day.
(g) "COMMON STOCK," when used with reference to the Company, shall
mean the common stock, par value $.01 per share, of the Company and, when used
with reference to any Person other than the Company, shall mean the capital
stock or other equity interests with the greatest per share or per unit voting
power of such other Person or, if such other Person is a Subsidiary of or is
controlled by another Person, the Person or Persons that ultimately controls
such first-mentioned Person.
(h) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) hereof.
(j) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(a) hereof.
(l) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth
in Section 11(b) hereof.
(m) "EXCHANGE ACT" shall have the meaning set forth in Section l(c)
hereof.
(n) "EXCHANGE RATIO" shall have the meaning set forth in Section
24(a) hereof.
(o) "EXEMPT PERSON" shall mean:
(i) the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed, established or holding Common Stock for or pursuant to the
terms of any such plan;
(ii) (a) those stockholders listed on Schedule I
hereto or any stockholder who is a descendant of such stockholders
(each, an "ORIGINAL STOCKHOLDER", and together, the "ORIGINAL
STOCKHOLDERS"), (b) any stockholder who is an Affiliate or Associate
of an Original Stockholder, or (c) any Person who would otherwise
become an Acquiring Person as a result of the acquisition of Common
Stock or a Beneficial Interest in Common Stock from an Original
Stockholder (or from any Affiliate or Associate of an Original
Stockholder) by way of gift, devise, descent or distribution;
provided, however, that no Person described in the foregoing clauses
(a), (b) or (c) shall be an Exempt Person if such Person (together
with all Affiliates and Associates of such Person) is the Beneficial
Owner of more than 30% of the outstanding Common Stock; and
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(iii) any Person who as of the date hereof was the Beneficial
Owner of 15% or more of the outstanding Common Stock; provided,
however, that such Person shall not be an Exempt Person if subsequent
to the date hereof such Person becomes the Beneficial Owner of any
additional shares of Common Stock.
(p) "EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(q) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(r) "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.
(s) "PERMITTED HOLDER" shall mean any Person who would otherwise
become an Acquiring Person solely by virtue of a reduction in the number of
outstanding shares of Common Stock; provided, however, that such Person shall
not be a Permitted Holder if, subsequent to such reduction, such Person shall
become the Beneficial Owner of any additional shares of Common Stock.
(t) "PERSON" shall mean any individual, firm, corporation,
partnership, joint venture, limited liability company, association, trust,
unincorporated organization or other entity, and shall include any successor
(by merger or otherwise) of such entity, as well as any syndicate or group
deemed to be a person under Section 14(d)(2) of the Exchange Act.
(u) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company,
having the rights, preferences and limitations set forth in the Certificate of
Designation attached to this Rights Agreement as Exhibit C, and, to the extent
there are not a sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the then outstanding
Rights, any other series of preferred stock of the Company containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(v) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b) hereof.
(w) "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.
(x) "RECORD DATE" shall have the meaning set forth in the recitals
clause at the beginning of this Rights Agreement.
(y) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.
(z) "RIGHT CERTIFICATE" shall have the meaning set forth in Section
3(a) hereof.
(aa) "SECTION 11(a)(ii) EVENT" shall mean an event described in
Section 11(a)(ii) hereof.
(bb) "SECTION 13 EVENT" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(cc) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
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(dd) "STOCK ACQUISITION DATE" shall mean the first date of a public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) or (g) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such; provided, however, that if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a), then no Stock Acquisition Date
shall be deemed to have occurred.
(ee) "SUBSIDIARY" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other
persons performing similar functions are Beneficially Owned, directly or
indirectly, by such Person.
(ff) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(gg) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section
3(b) hereof.
(hh) "TRADING DAY" shall have the meaning set forth in Section 11(d)
hereof.
(ii) "TRIGGERING EVENT" shall mean any event described in Section
11(a)(ii) or Section 13 hereof.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. If the Company appoints one or more co-Rights Agents,
the respective duties of the Rights Agent and any co-Rights Agents shall be as
the Company shall determine.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date and (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Board
of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
of, or the first public announcement of the intent of any Person (other than
an Exempt Person) to commence, a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and
Associates, would be the Beneficial Owner of 15% or more of the outstanding
Common Stock (irrespective of whether any shares are actually purchased
pursuant to such offer) (the earlier of such dates described in clauses (i)
and (ii) being referred to herein as the "DISTRIBUTION DATE"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(c) hereof) by the
certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate Right Certificates, and (y)
each Right (and the right to receive separate Right Certificates) will be
transferable only in connection with the transfer of a share (subject to
adjustment as hereinafter provided) of Common Stock. As soon as practicable
after the Distribution Date, the Company will prepare and execute, and
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the Rights Agent will send, by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, a Right Certificate in substantially the
form of Exhibit B hereto ("RIGHT CERTIFICATE") evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates and will be transferable separately from the Common Stock.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially in the form attached hereto as Exhibit C ("SUMMARY OF RIGHTS"),
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date at the address of such holder
shown on the records of the Company.
(c) With respect to certificates for Common Stock outstanding as of
the Record Date until the Distribution Date (or, if earlier, the Expiration
Date or the Final Expiration Date), the Rights will be evidenced by
certificates for Common Stock registered in the names of the holders thereof
together with a copy of the Summary of Rights. Until the Distribution Date
(or, if earlier, the Expiration Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock)
after the Record Date, but prior to the earliest of the Distribution Date, the
Expiration Date or the Final Expiration Date, shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between AmeriChoice
Corporation and ________, as Rights Agent, dated as of _____, 2002
(the "RIGHTS AGREEMENT"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal executive
office of AmeriChoice Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. AmeriChoice Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to or
beneficially owned by Acquiring Persons or their Associates or
Affiliates (as defined in the Rights Agreement) or any subsequent
holder of such Rights will become null and void.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the earliest of the Distribution Date, the Expiration Date or the Final
Expiration Date, be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the surrender for
transfer of the Rights associated with the Common Stock represented thereby.
If the Company purchases or
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acquires any Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Stock shall be deemed canceled
and retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Rights Agreement, or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
trading system on which the Rights may from time to time be listed or traded,
or to conform to usage. Subject to the provisions of Sections 11 and 22
hereof, the Right Certificates whenever distributed shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock, as shall be
set forth therein at the price per one-thousandth of a share of Preferred
Stock (the "PURCHASE PRICE"), but the amount and type of securities
purchasable upon exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided therein and in this Rights Agreement.
(b) Notwithstanding any other provision of this Rights Agreement, any
Right Certificate that represents Rights that are or were at any time on or
after the Distribution Date Beneficially Owned by an Acquiring Person or any
Affiliate or Associate thereof (or any transferee of such Rights) shall have
impressed on, printed on, written on or otherwise affixed to it (if the
Company or the Rights Agent has knowledge that such Person is an Acquiring
Person or an Associate or Affiliate thereof or transferee of such Persons or a
nominee of any of the foregoing) the following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or Associate (as
such terms are defined in the Rights Agreement) of an Acquiring Person
or a subsequent holder of such Right Certificate beneficially owned by
such Persons. Accordingly, under circumstances specified in the Rights
Agreement, this Right Certificate and the Rights represented hereby
will become null and void.
Notwithstanding the above provision, failure to place such legend on any Right
Certificate representing Rights that are otherwise null and void pursuant to
the terms of this Rights Agreement shall not affect the null and void status
of such Rights.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof that shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
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signature. The Right Certificates shall be countersigned (which
countersignature may be a facsimile) by the Rights Agent and shall not be
valid for any purpose unless so countersigned. If any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right Certificate
may be signed on behalf of the Company by any person who, at the actual date
of the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates, the date of
each of the Right Certificates, and the certificate numbers for each of the
Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date and at or prior to the Close of
Business on the earlier of the Expiration Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be (a) transferred or (b)
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following a Triggering
Event, Common Stock or other securities, cash or other assets, as the case may
be) as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Right
Certificate shall surrender the Right Certificate at the principal office of
the Rights Agent with the form of assignment on the reverse side thereof (or
enclose with such Right Certificate a written instrument of transfer in a form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be split up, combined or exchanged at the principal
office of the Rights Agent. Thereupon the Rights Agent shall countersign
(which countersignature may be a facsimile) and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, if requested by
the Company, reimbursement to the Company and the Rights Agent of all
8
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(b), Section 11(a)(iii) and Section
23(a)), in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed (with such signature duly guaranteed),
to the Rights Agent at the principal office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price with
respect to each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the earlier of (i) the Close of Business on February
20, 2012 (the "FINAL EXPIRATION DATE"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (such date being herein referred to
as the "EXPIRATION DATE") and (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall initially be $75 for each one
one-thousandth of a share of Preferred Stock issued pursuant to the exercise
of a Right. The Purchase Price and the number of one one-thousandths of a
share of Preferred Stock or other securities or consideration to be acquired
upon exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof. The Purchase Price shall be payable in
lawful money of the United States of America, in accordance with Section 7(c)
hereof.
(c) Except as provided in Section 7(d) hereof, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase and the Right Certificate duly executed, accompanied by payment of
the Purchase Price or so much thereof as is necessary for the shares or other
securities or assets to be purchased and an amount equal to any applicable
transfer tax, by cash, certified check or official bank check payable to the
order of the Company or the Rights Agent, the Rights Agent subject to Section
20(j) shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the number of shares of Preferred
Stock so elected to be purchased and the Company will comply and hereby
authorizes and directs such transfer agent to comply with all such requests,
or (B) if the Company shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of shares of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14(b) hereof, or the depositary receipts, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder, and
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(iv) after receipt promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate; provided, however, that in the
case of a purchase of securities, other than Preferred Stock, pursuant to
Section 13 hereof, the Rights Agent shall promptly take the appropriate
actions corresponding to the foregoing clauses (i) through (iv). In the event
that the Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate. The Company reserves the right to require prior to
the occurrence of a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
would be issued. Subject to Section 24, the payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash
or by certified or bank check payable to the order of the Company, or by wire
transfer of immediately available funds to the account of the Company
(provided that notice of such wire transfer shall be given by the holder of
the related Right to the Rights Agent).
(d) If the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
from and after the first occurrence of any Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and that receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights,
shares of Common Stock or the Company or (B) a transfer that a majority of the
Board of Directors has determined to be part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder
of Rights or any other Person as a result of its failure to make any
determination under this Section 7(e) or Section 4(b) with respect to an
Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for
10
such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy or cause to be destroyed such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to the Company's rights under Section 11(a)(iii) to
otherwise fulfill its obligations hereunder, the Company covenants and agrees
that it will cause to be reserved and kept available, out of and to the extent
of its authorized and unissued shares of Preferred Stock not reserved for
another purpose (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock or other securities) or
shares held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock or
other securities) that, as provided in this Rights Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full
of all outstanding Rights; provided, however, that the Company shall not be
required to reserve and keep available shares of Common Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii), Section 11(a)(iii)
or Section 13 hereof unless, and only to the extent that, the Rights become
exercisable pursuant to Section 7(a) following such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and following the occurrence of a Triggering Event, Common
Stock or other securities) issued or reserved for issuance upon exercise
thereof to be listed on The Nasdaq Stock Market's National Market ("NASDAQ")
or any other national securities exchange upon notice of issuance upon such
exercise and (ii) if then necessary to permit the offer and issuance of such
shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock or other securities), register and qualify such shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) under the Securities Act and any applicable state
securities or "blue sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as practicable after such filing and keep such registration
and qualifications effective until the earlier of the Expiration Date or the
Final Expiration Date of the Rights. The Company may temporarily suspend, for
a period of time not
11
to exceed 180 days, the exercisability of the Rights in order to prepare and
file a registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Rights Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the Securities Act
(if required) shall have been declared effective.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to insure that all shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock or other
securities) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the Purchase Price
in respect thereof), be duly and validly authorized and issued and fully paid
and nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or shares of Common Stock or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates for Preferred Stock (or
shares of Common Stock or other securities, as the case may be) upon exercise
of Rights in a name other than that of, the registered holder of the Right
Certificate, and the Company shall not be required to issue or deliver a Right
Certificate or certificate for Preferred Stock (or shares of Common Stock or
other securities, as the case may be) to a person other than such registered
holder until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name
any certificate for shares of Preferred Stock (or shares of Common Stock or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock (or shares of Common Stock or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Stock (or shares of Common Stock or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or shares of Common Stock or other securities) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a stockholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights
and shall not be entitled to receive any notice of any proceedings of the
Company, except as otherwise provided in this Agreement.
12
SECTION 11. ADJUSTMENTS TO NUMBER AND KIND OF SHARES, NUMBER OF
RIGHTS OR PURCHASE PRICE.
The number and kind of shares subject to purchase upon the exercise of
each Right, the number of Rights outstanding and the Purchase Price are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) If the Company shall at any time after the Record
Date (A) declare or pay any dividend on Preferred Stock payable in
shares of Preferred Stock, (B) subdivide or split the outstanding
shares of Preferred Stock into a greater number of shares, (C) combine
or consolidate the outstanding shares of Preferred Stock into a
smaller number of shares or effect a reverse split of the outstanding
shares of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in Section 7(e) or this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, the
holder thereof would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one such Right be less
than the per share par value of the shares of capital stock of the
Company issuable upon exercise of the Right. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 23(a) and Section 24, if any Person
shall at any time after the date of this Agreement become an Acquiring
Person (a "SECTION 11(a)(II) EVENT"), then, except as otherwise
provided in this Section 11, promptly following the occurrence of such
event, proper provision shall be made so that each holder of a Right
(except as provided in Section 7(e)) shall thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Rights Agreement in lieu of the
number of one one-thousandths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(such product, following such first occurrence, shall be referred to
as the "PURCHASE PRICE" with respect to each Right for all purposes of
this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d)) per share of such class of Common Stock for
which a Right is exercisable on the date of such first occurrence
(such number of shares is herein called the "ADJUSTMENT SHARES");
provided
13
that the Purchase Price and the number of Adjustment Shares shall be
further adjusted as provided in this Rights Agreement to reflect any
events occurring after the date of such first occurrence; and
provided, further, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of
Section 13, then only the provisions of Section 13 shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
Notwithstanding the foregoing, upon the occurrence of a Section
11(a)(ii) Event, any Rights that are or were at any time, on or after
the earlier of the Stock Acquisition Date or the Distribution Date,
Beneficially Owned by the Acquiring Person or any Associate or
Affiliate of the Acquiring Person shall become null and void and any
holder of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Rights Agreement.
(iii) If the number of shares of Common Stock that are
authorized by the Company's certificate of incorporation but that are
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii) and the Rights
shall become so exercisable, the Company shall take all such action as
may be necessary (including seeking stockholder approval for the
authorization of additional shares) to authorize additional shares of
Common Stock for issuance upon exercise in full of the Rights;
provided, however, that if the Company after using its reasonable best
efforts to do so is unable to cause the authorization of a sufficient
number of additional shares of Common Stock within 120 days (the
"SUBSTITUTION PERIOD"), the Company shall: (A) determine the value of
the Adjustment Shares issuable upon the exercise of a Right (the
"CURRENT VALUE") and (B) with respect to each Right (subject to
Section 7(e)), upon the exercise of such Right and payment of the
applicable Purchase Price, make adequate provision to substitute for
the Adjustment Shares (1) cash, (2) a reduction in the Purchase Price,
(3) equity securities other than shares of Common Stock of the Company
(including, without limitation, shares, or units of shares, of
preferred stock of the Company that, by virtue of having dividend,
voting and liquidation rights substantially comparable to the class of
shares of Common Stock of the Company for which a Right is exercisable
are deemed in good faith by the Board of Directors of the Company to
have essentially the same value as the class of shares of Common Stock
of the Company for which a Right is exercisable (such shares or units
of shares of preferred stock are herein called "COMMON STOCK
EQUIVALENTS")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
that, when added to the value of the shares of Common Stock of the
Company actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined in good faith by the Board of Directors of the Company
based upon the advice of a nationally recognized independent
investment banking firm selected in good faith by the Board of
Directors of the Company; provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause
(B) above within 120 days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires, then
the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, the shares of Common Stock of the Company for which a Right is
exercisable (to the extent available) and then,
14
if necessary, cash or shares of capital stock of the Company, which
shares and/or cash have an aggregate value equal to the excess of the
Current Value over the Purchase Price. To the extent that the Company
determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value
of each Adjustment Share shall be the Current Market Price per share
of Common Stock of the Company on the date of occurrence of the
Section 11(a)(ii) Event and the per share or per unit value of any
Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of Common Stock of the Company on such date.
(b) If the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Preferred Stock, shares having the same
rights, privileges and preferences as the Preferred Stock ("EQUIVALENT
PREFERRED STOCK") or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or Equivalent
Preferred Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preferred Stock) less than the
Current Market Price per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock that the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred Stock (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part
or all of which may be in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation or merger in
15
which the Company is the continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Preferred Stock and the denominator of
which shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price that would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "CURRENT MARKET
PRICE" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the "CURRENT MARKET PRICE" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per
share of the Common Stock for the ten consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (i) any
dividend or distribution on the Common Stock (other than a regular quarterly
cash dividend and other than the Rights), or (ii) any subdivision, combination
or reclassification of the Common Stock, and prior to the expiration of the
requisite 30 Trading Day or ten Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification occurs, then, and in each
such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on Nasdaq or, if the
shares of Common Stock are not listed or admitted to trading on Nasdaq, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used. The term "TRADING DAY"
shall mean a day on
16
which the principal national securities exchange or national market system on
which the shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not listed
or admitted to trading on any national securities exchange or national market
system, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "CURRENT MARKET PRICE" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "CURRENT MARKET
PRICE" per share of Preferred Stock shall be determined in the same manner as
set forth for the Common Stock in Section 11(d)(i) hereof (other than the last
sentence thereof). If the Current Market Price per share or one one-thousandth
of a share of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in Section 11(d)(i) hereof, the "CURRENT MARKET PRICE" per
share of Preferred Stock shall be conclusively deemed to be an amount equal to
1000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Rights Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, "CURRENT MARKET
PRICE" per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Company, acting by resolution of its Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the "CURRENT MARKET PRICE" of one one-thousandth of a share of
Preferred Stock shall be equal to the "CURRENT MARKET PRICE" of one share of
Preferred Stock divided by 1000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided,
however, that any adjustments that by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other security or one-millionth of a share of Preferred Stock, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which mandates such
adjustment, and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares of Preferred Stock contained in
Xxxxxxx 00(x), (x), (x), (x), (x), (x), (x), (x), (x), (x) and (m) hereof, and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
17
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of
a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of shares covered by
a Right immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of one one-thousandths of a
share of Preferred Stock for which a Right may be exercised, to adjust the
number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of
a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-thousandths of a share
of Preferred Stock for which such Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten days later than the date
of the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandths of a
share of Preferred Stock and the number of one one-thousandths of a share
18
of Preferred Stock that were expressed in the initial Right Certificates
issued hereunder without prejudice to any such adjustment or change.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action, including using its
reasonable best efforts to obtain any required stockholder approvals, which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable one one-thousandths of
a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the Current Market Price, (iii)
issuance wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Stock Acquisition Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction not prohibited by Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction not prohibited by Section 11(o)), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one transaction
or a series of related transactions not in the ordinary course of the
Company's business, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of
which is not prohibited by Section 11(o)), if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or
19
sale, the stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates; provided, however, this 11(n) shall not affect the
ability of any Subsidiary of the Company to consolidate with, merge with or
into, or sell or transfer assets or earning power to, any other Subsidiary of
the Company.
(o) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 23 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights
(p) Anything in this Rights Agreement to the contrary, in the event
that the Company shall at any time after the date of this Rights Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
SECTION 12. CERTIFICATION OF ADJUSTMENTS. Whenever an adjustment is
made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of
the facts giving rise to such adjustment, (b) promptly file with the Rights
Agent and with the transfer agent for the Common Stock or Preferred Stock a
copy of such certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate (or, if prior to the Distribution Date, to each holder
of a certificate representing shares of Common Stock) in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or the force or
effect of or the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any certificate prepared by the Company pursuant
to Sections 11 and 13 and on any adjustment therein contained. Any adjustment
to be made pursuant to Sections 11 and 13 of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) If at any time on or after the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person or Persons (other than
20
a Subsidiary of the Company in a transaction not prohibited by Section 11(o)),
and the Company shall not be the surviving or continuing corporation of such
consolidation or merger, (y) any Person or Persons (other than a Subsidiary of
the Company in a transaction not prohibited by Section 11(o)) shall
consolidate with, or merge with and into, the Company, and the Company shall
be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be converted into or exchanged for
stock or other securities of any other Person or of the Company or cash or any
other property, or (z) the Company or one or more of its Subsidiaries shall
sell or otherwise transfer to any other Person or any Affiliate or Associate
of such Person (other than the Company or any Subsidiary of the Company, in
one or more transactions not prohibited by Section 11(o)), in one transaction
or a series of related transactions not in the ordinary course of the
Company's business, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole), then, on the first occurrence of any such
event, proper provision shall be made so that (i) each holder of record of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof and payment of the Purchase Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid and nonassessable and freely tradable Common Stock
of the Principal Party, not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence
of a Section 13 Event, multiplying the Purchase Price in effect immediately
prior to the first occurrence of a Section 11(a)(ii) Event by the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such first occurrence of a Section 11(a)(ii)
Event) and (2) dividing that product (such product, following the first
occurrence of a Section 13 Event, shall be referred to as the "PURCHASE PRICE"
for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price (determined as provided in Section 11(d) hereof with respect to
the Common Stock) per share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event (or the fair market value on
such date of other securities or property of the Principal Party, as provided
for herein); provided that the Purchase Price and the number of shares of
Common Stock of such Principal Party issuable upon exercise of each Right
shall be further adjusted as provided in this Rights Agreement to reflect any
events occurring after the date of the first occurrence of a Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Rights Agreement; (iii) the term "COMPANY" for all purposes
of this Rights Agreement shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 hereof
shall only apply to such Principal Party following the first occurrence of a
Section 13 Event; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; provided, however, that, upon the
subsequent occurrence of any merger, consolidation, sale of all or
substantially all assets, recapitalization,
21
reclassification of shares, reorganization or other extraordinary transaction
in respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase
Price, such cash, shares, rights, warrants and other property that such holder
would have been entitled to receive had such holder, at the time of such
transaction, owned the shares of Common Stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property. The provisions of Section 11(a)(ii) shall be of no effect following
the first occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of the Common Stock of
which has the greatest market value or (B) if no securities are so
issued, (x) the Person that is the other party to the merger or
consolidation and that survives said merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of
which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger
or consolidation, the Person that does survive the merger or
consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z)
of the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction
or transactions receives the same portion of the assets, cash flow or
earning power so transferred or if the Person receiving the greatest
portion of the assets, cash flow or earning power cannot be
determined, whichever of such Persons as is the issuer of Common Stock
having the greatest market value of shares outstanding;
provided, however, that in any such case described in the foregoing (b)(i) or
(b)(ii), if the Common Stock of such Person is not at such time and has not
been continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, the
term "PRINCIPAL PARTY" shall refer to such other Person, or if such Person is
a Subsidiary, directly or indirectly, of more than one Person, the Common
Stock of which are and have been so registered, the term "PRINCIPAL PARTY"
shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered
22
to the Rights Agent an agreement confirming that the requirements of Sections
13(a) and (b) hereof shall promptly be performed in accordance with their
terms and that such consolidation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this Rights Agreement as
the same shall have been assumed by the Principal Party pursuant to Sections
13(a) and (b) hereof and further providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party
will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange,
to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on such securities exchange
and, if the Common Stock of the Principal Party shall not be listed on
a national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be listed by a national
securities exchange or admitted for trading on Nasdaq;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding
Rights.
If any of the transactions described in Section 13(a) hereof shall occur at
any time after the occurrence of a transaction described in Section 11(a)(ii)
hereof, the Rights that have not theretofore been exercised shall thereafter
be exercisable in the manner described in Section 13(a). The provisions of
this Section 13 shall similarly apply to all successive mergers,
consolidations, sales, transfers or other Section 13 Events.
(d) Furthermore, if the Principal Party that is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its certificate or articles of incorporation,
bylaws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Current Market Price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then Current Market
Price (other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special payment, tax or similar provisions in connection
with the issuance of the Common Stock of such Principal Party pursuant to the
provisions of this Section 13, then, in such event, the Company hereby agrees
23
with each holder of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the holders of record of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the then current
market value of a whole Right. For the purposes of this Section 14(a), the
then current market value of a whole Right shall be determined in the same
manner as the Current Market Price of a share of Common Stock shall be
determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandths of a share of Preferred Stock) upon exercise of the Rights, or
to exchange the Rights pursuant to Section 24 of this Agreement for fractions
of Common Stock. Fractions of shares of Preferred Stock in integral multiples
of one one-thousandth of a share of Preferred Stock may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock. With respect
to fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, if the Company does not issue
fractional shares or depositary receipts in lieu thereof, the Company shall
pay to the registered holders of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-thousandth of a share of Preferred Stock shall be the Current
Market Price of one one-thousandth of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii)).
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one share of Common Stock. For the purposes of
this Section 14(c), the current market value of one share of Common Stock
shall be the Current Market Price of a share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof).
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
(other than fractions that are integral multiples of one one-thousandths of a
share of Preferred Stock) upon exercise of a Right.
24
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement are vested in the respective holders of record of the Right
Certificates (and, prior to the Distribution Date, the holders of record of
the Common Stock); and any holder of record of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in such holder's own behalf
and for such holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company or any other Person to enforce,
or otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Rights Agreement and, accordingly, that they will
be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person subject to this Rights Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be evidenced
by a Right Certificate and will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its reasonable efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon
as possible.
25
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder of a Right or a Right Certificate, as such, shall be
entitled to vote, receive dividends in respect of or be deemed for any purpose
to be the holder of Preferred Stock or any other securities of the Company
that may at any time be issuable upon the exercise of the Rights, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as set forth in
Section 25 hereof), or to receive dividends or subscription rights in respect
of any such stock or securities, or otherwise until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance
with the provisions of this Rights Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent for anything done
or omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Rights Agreement including the costs and expenses
of defending against any claim of liability.
(b) The Rights Agent shall be protected by the indemnity provided in
this Section 18 and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its administration of this
Rights Agreement in reliance upon any Right Certificate, certificate for
Common Stock or other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary,
guaranteed, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. If at the time such successor
Rights Agent shall succeed to the agency created by this Rights Agreement, any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent
26
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and if at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
(b) If at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Right Certificates so countersigned; and if at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates (or, if prior to the Distribution Date, the holders of Common
Stock), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or its own in-house counsel), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted to be taken by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, Chief Executive Officer, President or any Vice President, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
27
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability
of the Rights or any adjustment required under the provisions hereof or
responsible for the manner, method or amount of any such change or adjustment
or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced
by Right Certificates after actual notice of any such change or adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
or other securities to be issued pursuant to this Rights Agreement or any
Right Certificate or as to whether any shares of Common Stock or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, Chief Executive Officer, President, any Vice
President, the Secretary, any Assistant Secretary of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to the
transfer agent of the Common Stock and the
28
Preferred Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent (with or without cause) upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to the transfer agent of the Common Stock and the
Preferred Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of
a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States
or any State thereof, in good standing, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has, or
together with its parent entity has, at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and the transfer agent of the
Common Stock and the Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Expiration Date, the Purchase Price per share and
the number or kind of class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall,
with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and
to
29
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued, and (ii)
no such Right Certificate shall be issued, if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), and (ii) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "REDEMPTION PRICE"). The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the
Current Market Price, as defined in Section 11(d)(i), of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price,
without any interest thereon, for each Right so held. The Company shall
promptly give public notice of any such redemption; provided, however, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within ten days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last
address as it appears upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent of the
Common Stock. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. The failure to give notice required by this Section 23(b)
or any defect therein shall not affect the legality or validity of any
redemption hereunder. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Stock prior to the Distribution Date.
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 7(e)) for
shares of Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
30
similar transaction occurring after the date of this Rights Agreement (such
exchange ratio being hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of shares of Common Stock representing 50% or more of the
shares of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock or Common
Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to all of the
holders of such Rights at the last address of each holder as it appears upon
the registry books of the Rights Agent. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock or Common Stock Equivalents
for Rights will be effected and, in the event of any partial exchange, the
number and kind of Rights that will be exchanged. The failure to give notice
required by this Section 24 or any defect therein shall not affect the
legality or validity of any exchange hereunder. Any partial exchange shall be
effected pro rata based on the number of Rights being exchanged (other than
Rights that have become void pursuant to the provisions of Section 7(e)) held
by each holder of such Rights.
(c) If the number of shares of Common Stock that are authorized by the
Company's certificate of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not
sufficient to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the
Rights.
(d) The Company shall not be required to issue fractions of a share of
Common Stock or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of such whole shares of Common
Stock. For purposes of this Section 24(d), the current market value of a whole
share of Common Stock shall be the closing price of a share of Common Stock
(as determined pursuant to the second sentence of Section 11(d)(i)) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
(a) If the Company, after the Stock Acquisition Date, shall propose to
(i) effect any of the transactions referred to in Section 11(a)(i) or to pay
any dividend to the holders of record of its Preferred Stock payable in stock
of any class or to make any other distribution to the holders
31
of record of its Preferred Stock (other than a regular periodic cash
dividend), (ii) offer to the holders of record of its Preferred Stock options,
warrants, or other rights to subscribe for or to purchase shares of Preferred
Stock (including any security convertible into or exchangeable for Preferred
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, (iii) effect
any reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, (iv) effect any consolidation or merger with or
into, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions not in the ordinary course of the Company's
business, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person or Persons, or (v)
effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of record of Rights, in
accordance with Section 26 hereof, notice of such proposed action, which shall
specify the record date for the purposes of such transaction referred to in
Section 11(a)(i), or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger,
sale or transfer of assets, liquidation, dissolution, or winding up is to take
place and the record date for determining participation therein by the holders
of record of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii)
above at least ten days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least ten days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
record of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) If any of the transactions referred to in Section 11(a)(ii) or
Section 13 of this Rights Agreement are proposed, then, in any such case, the
Company shall give to each holder of Rights, in accordance with Section 26
hereof, notice of the proposal of such transaction at least ten days prior to
consummating such transaction, which notice shall specify the proposed event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
or Section 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
(c) If any Section 11(a)(ii) Event shall occur, then all references in
this Section 25 to Preferred Stock shall be deemed thereafter to refer to
Common Stock or other securities for which the Rights are then exercisable.
SECTION 26. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record
of any Right Certificate or Right to or on behalf of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
AmeriChoice Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
32
with a copy to:
King & Spalding
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: E. Xxxxxxx Xxxxx, II
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by
the holder of record of any Right Certificate or Right to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Company) as follows:
[NAME AND ADDRESS OF RIGHTS AGENT]
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent of
the Common Stock and the Preferred Stock.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Stock
Acquisition Date and except as provided in the third sentence of this Section
27, the Company may in its sole and absolute discretion and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of this
Rights Agreement without the approval of any holders of the Rights or the
Common Stock. From and after the Stock Acquisition Date, the Company may and
the Rights Agent shall, if the Company so directs, supplement or amend this
Rights Agreement without the approval of any holders of Right Certificates in
order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein that may be defective or inconsistent with any other
provisions herein, or (iii) change or supplement the provisions hereunder in
any manner that the Company may deem necessary or desirable; provided, that no
such supplement or amendment shall adversely affect the interests of the
holders of Rights (other than any interest of an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company or as may be necessary or
advisable in the administration of this Rights Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this Rights
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Rights
33
Agreement (including a determination to redeem or not redeem the Rights or to
amend this Rights Agreement). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) that are done or made by the Board in good
faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject
the Board to any liability to the holders of the Rights.
SECTION 29. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 30. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Stock) any legal or equitable right,
remedy or claim under this Rights Agreement; but this Rights Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
SECTION 31. DELAWARE CONTRACT. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
SECTION 32. COUNTERPARTS. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 34. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Rights Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
34
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
Attest: AMERICHOICE CORPORATION
By: By:
-------------------------------------- -------------------------
Name: Name:
Title: Title:
Attest: [RIGHTS AGENT]
By: By:
--------------------------------------- -------------------------
Name: Name:
Title: Title:
35
SCHEDULE I
LIST OF ORIGINAL STOCKHOLDERS
Xxxxxxx Xxxxxxx
Xxxx X. Xxxxxx
Xxxxx X. Xxxx
EXHIBIT A
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
AMERICHOICE CORPORATION
(Pursuant to Section 151 of the Delaware General Corporation Law)
AmeriChoice Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"CORPORATION"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on February 20,
2002:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "BOARD OF
DIRECTORS" or the "BOARD") in accordance with the provisions of the
Corporation's Certificate of Incorporation, as amended (the "CERTIFICATE OF
INCORPORATION") the Board of Directors hereby creates a series of Preferred
Stock, par value $0.01 per share (the "PREFERRED STOCK"), of the Corporation
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "SERIES A JUNIOR PARTICIPATING PREFERRED STOCK" (the
"SERIES A PREFERRED STOCK") and the number of shares constituting the Series A
Preferred Stock shall be 50,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares
of any series of Preferred
A-1
Stock (or any similar stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of common stock,
par value $0.01 per share (the "COMMON STOCK"), of the Corporation, and
of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred
to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 and
(b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (A)
of this Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock
in
A-2
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking on parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends
paid
A-3
ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or
as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
A-4
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of
stock, securities, cash or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation shall
not be amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section 11. Fractional Shares. The Series A Preferred Stock may
be issued in fractions of a share that shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of the Series A Preferred Stock.
A-5
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this [___] day of [__________] 2002.
-----------------------------------
Chairman of the Board
Attest:
------------------------------
Secretary
A-6
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER February 20, 2012 OR UNDER CERTAIN
CIRCUMSTANCES EARLIER. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR
AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A TRANSFEREE OF
THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY WILL BECOME NULL AND VOID.
Right Certificate
AMERICHOICE CORPORATION
This certifies that _________________________ or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of ______, 2002 (the "RIGHTS AGREEMENT") between
AmeriChoice Corporation, a Delaware corporation (the "COMPANY"), and
_____________________, a ____________ banking corporation (the "RIGHTS
AGENT"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Eastern Time) on February 20, 2012 at the principal office of the Rights
Agent, or its successors as Rights Agent, one one-thousandth fully paid and
nonassessable share of Series A Junior Participating Preferred Stock, par
value $.01 per share ("PREFERRED STOCK"), of the Company at a purchase price
of $____ as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "PURCHASE PRICE"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
shares of Preferred Stock that may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of ________ __, 2002 (the "RECORD DATE") based on the shares
of Preferred Stock of the Company as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandths of a share of Preferred Stock that may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain
events and, upon the happening of certain events, securities other than shares
of Preferred Stock, or other property, may be acquired upon exercise of the
Rights evidenced by this Right Certificate, as provided by the Rights
Agreement.
B-1
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a like aggregate
number of one one-thousandths of a share of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or
in part for shares of Common Stock or common stock equivalents.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, except as provided in the
Rights Agreement, and in lieu thereof, as provided in the Rights Agreement,
fractions of shares of Preferred Stock shall receive an amount in cash equal
to the same fraction of the then current market value of a share of Preferred
Stock.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors, or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings (except as provided in the Rights Agreement) or other
actions affecting stockholders or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal, dated as of _____________________, 20__.
ATTEST: AMERICHOICE CORPORATION
By:
--------------------------------------- ---------------------------
Secretary Title:
Countersigned:
[RIGHTS AGENT], as Rights Agent
By:
------------------------------------
Authorized signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and
transfers unto _____________________________________________________________
----------------------------------------------------------------------------
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________ Attorney to transfer the within Right Certificate on the books of
the within-named Company, with full power of substitution.
Dated: _______________, 20__
--------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or any transferee of such Persons.
Dated: _______________, 20___
--------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to
Exercise the Right Certificate.)
To: AmeriChoice Corporation
The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such share(s) be issued in the name:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
Dated: ___________________, 20____
------------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
B-6
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
------------------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of an Acquiring Person or any transferee of such Persons.
Dated: ___________________, 20____
--------------------------
Signature
B-7
EXHIBIT C
AMERICHOICE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 20, 2002, the Board of Directors of AmeriChoice
Corporation (the "COMPANY") adopted a Rights Agreement (the "RIGHTS
AGREEMENT") and authorized and declared a dividend of one Preferred Stock
Purchase Right (a "RIGHT") with respect to each outstanding share of common
stock, par value $.01 per share ("COMMON STOCK"), of the Company. The dividend
is payable on ___________, 2002 to the stockholders of record on that date
(the "RECORD DATE"), and to each holder of Common Stock issued thereafter
until the Distribution Date (as hereinafter defined) or the expiration or
earlier redemption or exchange of the Rights. Except as set forth below, each
Right entitles the registered holder thereof to purchase from the Company at
any time after the Distribution Date one one-thousandth of a share of Series A
Junior Participating Preferred Stock, par value $.01 per share ("PREFERRED
STOCK") at a price of $75 per one one-thousandth of a share, subject to
adjustment (the "PURCHASE PRICE"). The description and terms of the Rights are
set forth in the Rights Agreement.
Initially, the Rights will attach to all certificates representing
shares of Common Stock, then outstanding and no separate Right Certificates
(as hereinafter defined) will be distributed. The Rights will become
exercisable and separate from the shares of Common Stock upon the earlier to
occur of (i) ten days after the date (the "STOCK ACQUISITION DATE") of a
public announcement that a person or group of affiliated or associated persons
has acquired beneficial ownership of 15% or more of the outstanding shares of
Common Stock (such person or group being hereinafter referred to as an
"ACQUIRING PERSON"(1)); and (ii) ten business days (or such later date as the
Board may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would result in a person or group becoming the beneficial owner of 15% or more
of the outstanding shares of
-----------------------
(1) Each of the following persons will not be deemed to be an Acquiring
Person even if they have acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Stock:
(i) the Company, any subsidiary of the Company, or any employee
benefit plan or employee stock plan of the Company or of any
subsidiary of the Company; (ii) certain stockholders of the Company
and descendants of such stockholders (each an "Original Stockholder,"
and together, the "Original Stockholders"), any stockholder who is
affiliated or associated with an Original Stockholder and any person
who would otherwise become an Acquiring Person as a result of the
receipt of Common Stock or a beneficial interest in Common Stock from
an Original Stockholder by way of gift, devise, descent or
distribution, but not by way of sale, unless any such person,
together with his affiliates and associates, becomes the beneficial
owner of more than 30% of the outstanding shares of Common Stock;
(iii) any person who would otherwise become an Acquiring Person
solely by virtue of a reduction in the number of outstanding shares
of Common Stock unless and until such person shall become the
beneficial owner of any additional shares of Common Stock; and (iv)
any person who as of the Record Date was the beneficial owner of 15%
or more of the outstanding Common Stock unless and until such person
shall become the beneficial owner of any additional shares of Common
Stock.
Common Stock (the earlier of such dates in clauses (i) and (ii) being called
the "DISTRIBUTION DATE"). Shares of Common Stock beneficially owned by the
Company or any subsidiary of the Company will not be considered outstanding
for purposes of calculating the percentage ownership of any person.
Until the Distribution Date (or earlier redemption or expiration of
the Rights), (i) the Rights will be transferred with, and only with, the
shares of Common Stock, (ii) new Common Stock certificates issued after the
Record Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by reference, and (iii)
the surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation, will also
constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (collectively,
the "RIGHT CERTIFICATES") will be mailed to holders of record of the shares of
Common Stock as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights. The Rights are not
exercisable until the Distribution Date. The Rights will expire at the close
of business on February 20, 2012 unless earlier redeemed by the Company as
described below.
If any person becomes an Acquiring Person, each holder of a Right
will thereafter have the right (the "FLIP-IN RIGHT") to receive in lieu of
shares of Preferred Stock, upon payment of the Purchase Price, shares of
Common Stock (or in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the Purchase Price of the
Right. Notwithstanding the foregoing, all Rights that are, or were,
beneficially owned by an Acquiring Person or any affiliate or associate
thereof will be null and void and not exercisable.
If, at any time on or after the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding shares of Common Stock immediately
prior to the consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of the Company's
assets, cash flow or earning power is sold or transferred other than in the
ordinary course of the Company's business, then each holder of a Right (except
Rights that have previously been voided as set forth above) shall thereafter
have the right (the "FLIP-OVER RIGHT") to receive, in lieu of shares of
Preferred Stock and upon exercise and payment of the Purchase Price, shares of
common stock of the acquiring company having a value equal to two times the
Purchase Price. If a transaction would otherwise result in a holder's having a
Flip-In as well as a Flip-Over Right, then only the Flip-Over Right will be
exercisable. If a transaction results in a holder's having a Flip-Over Right
subsequent to a transaction resulting in a holder's having a Flip-In Right, a
holder will have Flip-Over Rights only to the extent such holder's Flip-In
Rights have not been exercised.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of the
C-2
Preferred Stock of evidences of indebtedness or assets (excluding dividends
payable in Preferred Stock) or of subscription rights or warrants (other than
those referred to above). However, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%.
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the
Common Stock or a stock dividend on the Common Stock payable in Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 1,000 times the dividend declared per
share of Common Stock. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $1,000 per share but will be entitled to an aggregate payment of 1,000
times the payment made per share of Common Stock. Each share of Preferred
Stock will have 1,000 votes, voting together with the Common Stock. Finally,
in the event of any merger, consolidation or other transaction in which shares
of Common Stock are exchanged, each share of Preferred Stock will be entitled
to receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
If, after the triggering of Flip-In Rights, insufficient shares of
Common Stock are available for the exercise in full of the Rights, the Company
shall take all such action as may be necessary to authorize additional shares
of Common Stock for issuance upon exercise in full of the Rights. If, after
the expiration of 120 days after the triggering of Flip-In Rights,
insufficient shares of Common Stock are available for the exercise in full of
the Rights, holders of Rights will receive upon exercise shares of Common
Stock to the extent available and then cash, property or other securities of
the Company, in proportions determined by the Company, so that the aggregate
value received is equal to twice the Purchase Price.
The Company is not required to issue fractional shares of Preferred
Stock (other than fractions that are integral multiples of one one-thousandths
of a share of Preferred Stock that may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, a payment in cash will
be made to the holder of such Rights equal to the same fraction of the current
value of one one-thousandth of a share of Preferred Stock. Following the
triggering of the Flip-In Rights, the Company will not be required to issue
fractional shares of Common Stock upon exercise of the Rights and, in lieu
thereof, a payment in cash will be made to the holder of such Rights equal to
the same fraction of the current market value of a share of Common Stock.
At any time prior to the Distribution Date, the Board of Directors of
the Company may redeem all, but not less than all, of the then outstanding
Rights at a price of $.001 per Right
C-3
(subject to adjustment) (the "REDEMPTION PRICE"), at any time before the close
of business on the Stock Acquisition Date.
At any time after a Person becomes an Acquiring Person and prior to
the acquisition by any person of 50% or more of the outstanding shares of
Common Stock, the Company may exchange the then outstanding and exercisable
Rights (other than Rights owned by an Acquiring Person that will have become
null and void), in whole or in part, for shares of Common Stock, each Right
being exchangeable for one share of Common Stock, or common stock equivalents
equal to one share of Common Stock, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The issuance of the Rights is not taxable to the Company or to
stockholders under presently existing federal income tax law, and will not
change the way in which stockholders can presently trade the Company's shares
of Common Stock. If the Rights should become exercisable, stockholders,
depending on then existing circumstances, may recognize taxable income.
Prior to the Stock Acquisition Date, the Rights Agreement generally
may be amended by the Board of Directors of the Company without the consent of
the holders of the Rights or the Common Stock. On or after the Stock
Acquisition Date, the Company may amend the Rights Agreement only to (i) cure
any ambiguity, (ii) correct or supplement any provision that may be defective
or inconsistent with the other provisions of the Rights Agreement, or (iii)
change or supplement the Rights Agreement in any other manner that the Company
may deem necessary or desirable, provided that no amendment shall adversely
affect the interests of the holders of Rights (other than any interest of an
Acquiring Person or an affiliate or associate of an Acquiring Person).
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a Person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. Accordingly, the
existence of the Rights may deter certain acquirors from making takeover
proposals or tender offers. However, the Rights Agreement helps ensure that
the Company's stockholders receive fair and equal treatment in the event of
any proposed takeover of the Company. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors
because the Rights may be redeemed by the Company at the Redemption Price
prior to the time that a person or group has acquired beneficial ownership of
15% or more of the outstanding Common Stock. The adoption of the Rights
Agreement is not in response to any specific takeover threat or proposal, but
is a precaution taken to protect the rights of the Company's stockholders.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, that is incorporated in this summary description by reference.
C-4
